where live from -- we are live from new york. are watching.e after months of silence secretary janet yellen speaking in jackson hole. the possibility of a rate hike has climbed to more than 60%. david: the final hour of trading. putting cold water and on -- on an earlier rally. bonnie: can the brand ever recover from that emissions scandal? one hour from the close of trading in the u.s. let's head to the market desk. anchor: we are at session lows. investors pulling out from equities after we saw first of

pop off of janet yellen's speech. stanley fischer putting cold water on that talking about september. this is the we are with less than our left in the trading session. the dow down by point four of 1%. seeing a 200 point spread. 18,450.ed around the we are the opposite of that. down .4 of 1% and the nasdaq .2 of 1%. with all this it is happening because of that september rate hike getting more on the table, looking at fed fund futures, it has risen by 10% points. the odds of that have been on the the yield two-year and the 10 year. this is where we stand right now. five aces winds up 8.84%. six basis points for the 10 year. it is having a ripple effect on

the bloomberg dollar index. the dollar is rising right now against a basket of currencies. up almost 1%, a really big changer. 1181 against a basket of currencies. this is the biggest gain the july 5. and on the the rising 1.25%. bonnie: what were the individual moving quitewere apart from the symposium. >> first off apple right now is .8 of 1%.ght now this is in large part because of the nikkei report saying that you might be a shortage in the next iphone coming out because of all two mechanics. this is another biggest point loser on the s&p tech sector. and down 10% there. down hardware sales was and gains were down.

herbalife is down 3%. carl icahn trying to sell his 18% stake create we want to talk out all the are an avid. both of them are falling today. only are is down by 5%. through with a merger that they had previously agreed to. shares of a lear had been halted, down as much as 4.5%. definitely a topsy-turvy day. david: let's get a check from mark upton. mark: the impeachment trial of results president turned into a yelling match and was temporally suspended for a second time today. the head of resume senate declared stupidity is endless and sharply criticized a colleague who questioned the body's moral authority.

speaksed joe morris of on monday. she is a -- accused of aching fiscal rules. she said her enemies are trying to stage a coup. lula da silva faces corruption and money laundering charges. the former later labor has denied wrongdoing and says he is the victim of political persecution. turkey is aiming kurdish mountains for a suicide truck coming in the southeastern part of the country. a truck exploded killing 11 officers. more than 70 others were wounded. violence resumed between police in kurdish militants after a two-year truce. hundreds of security personnel .ave since been killed president obama is expanding a national monument off the coast of hawaii. it is the second largest marine protected area containing 580 oth -- 582's thousand

square miles. back with capsule is gifts from the international space station. it parachuted into the pacific off of the coast of mexico. it includes a dozen mice that traveled on the dragon is part of a genetics study. dayal news 24 hours a powered by more than 2600 journalists and in over 120 countries. i am mark crumpton. this is bloomberg. david: thanks, mark. let's get back to the annual symposium in jackson hole. hascase for a rate hike strengthened. janet yellen has spoken. let's look at some highlights. we asked top fed officials for their view of the u.s. economy and the path of getting monetary policy back to normal. >> it is time to rethink our

normalization plan. >> under any metric it would be time to use. >> i could see to rate hikes when i look at the calendar. >> the end -- anticipated path of rates going forward will be much water. we should the on a program of gradual rate increases. we can afford to be patient. think that is probably not the right characterization of what will happen over the forecast horizon. >> there is no preset course. you have to see how the economy performs. >> when i look at where we are with the job market, when i look at inflation and our forecast for that i think it is time to move. >> for business people out there and people in the markets i think the path of rate is just as important or more important than exactly -- the exact timing of when the next move is. >> we're being data-driven and we're being kate -- patient and a bit cautious.

so do not think the committee is risking a lot and being cautious. >> we have persistent headwinds. banks areentral cutting rates and we are below our inflation target. >> i do not think we are behind the curve in terms of inflation or risking big financial instability event. >> our caution is appropriate. it has paid dividends and will continue to do so. >> the byword public should understand is cautious and gradual and there is no gun to her head. of fivehe views officials. the 17ask you about words we have focused on most of the day when janet yellen said in that speech i believe the case for an increase in the federal funds rate has strengthened in recent. what is the read on that phrase out there in jackson hole, is a rate hike in them -- imminent? >> not imminent that it does

seem possible or more possible for september. yellen has not ruled it out. she is not ruling it in. she did not give any time frames but that is why you see the arket pricing in december as second choice option or perhaps a first choice option. they believe now that she means to raise interest rates this year. there is a two-part conference going. that officials and folks attending want to talk about the medium to long-term implications. wall street wants the short term and yellen gave us one sentence on that line and has satisfied wall street's desires if she did not give a time frame. bonnie: if she worried about how the fed would respond to a per -- a potential recession? guest: there is no recession talk by the theory that could -- it could come is one of the topics being discussed in the

meeting rooms. yellen pushed back against that today citing a new paper that looked at historical episodes of recessions. when those recessions began the fed was tighter than it needed to be. a lot of the rate cutting the fed did was to get rates down to where they should have been and then they could have accommodation after that. she said because interest rates are so low right now we would be able to cut rates and go directly to stimulus. we would not spend a lot time removing excess tightening. david: what is the overarching sense of the health of the economy? some confidence in the state of the u.s. economy. we had stan fisher talking about unemployment being close to what he wants it to be. can you give us the overarching sense of sentiment right now? general the leaf is the economy is in relatively good shape.

it is going through a stagnant phase where we do not see a lot of growth. nobody knows the exact reason for that of the general feeling is overtime that is likely to change. companies will invest more in weductivity enhancements and will see productivity rise and that will give a boost to the economy. there is no real fear of inflation breaking out of this point. basically what you see is what you get for the future and what the fed has to decide is what is the appropriate interest-rate setting for the current kind of economy we are experiencing. that is what the short-term debate is about. bonnie: what is the consensus on how inflation will get back to 2%. someone mentioned two years to get back to 2%. isst: no one is certain what going on. the feds line has always been for the past two years that inflation is low in large part because of the decline in energy prices. they have stabilized and we will see those affect fall out of the

inflation rate and naturally it will rise. they are saying we will see the pushnings of some wage inflation as companies run out of workers with the implement rate going lower. that should push wages higher. has not happened yet. are -- there is a belief that it is starting to. we should see inflation start to rise on that score as well. you put the two together and get back to 2%. michael mckee doing some great interviews in jackson hole, wyoming. david: the stock falling dramatically in today's session. we will look at the numbers next. this is bloomberg. ♪

bonnie: this is bloomberg market. time for more business headlines. breaking down to $32 a share in cash. -- the deal is expected to be completed in the fourth quarter. mazda is recalling more than 190,000 sport-utility vehicles. with a potentially dangerous stealing -- steering control defect. lester mazda recalled more than 119,000 cx nine suvs for the

same reason. owners will be notified they can take their vehicle to a mazda dealer for repairs. artist to give apple axis will not be able to get their tracks and featured playlists. they have been engaging in such practices for about a year. that is your bloomberg business update. at shares ofok gamestop that have been falling the most in 10 months. likes -- let's explore why. they showed a 10.6% drop in comparable sales. double what analysts expected. also marked the second straight orderly drop. seals are coming under pressure slid 30%.me sales

it is a bright spot as part of the company's diversification strategy. 's largestat&t retailer. gamestop was the most shorted stock in the s&p 500 and was removed from the edge mark index. it remains one of the most shorted stocks on the new york stock exchange. the top corner of gamestop business. developers are putting their effort into pc and smartphone games. , microsoft, and nintendo are getting ready to release new models. gamestop is capitalizing on that craze of -- with more than 400 stores marked as of the steps --

pokestops. bonnie: volkswagen is announcing a deal with 652 u.s. auto dealerships. johnny us now from detroit. tell us about the settlement, and what it means for volkswagen. david: what volkswagen has done is they have come up with $1.2 billion to settle with dealers have been complaining that the value of their franchises has gone down because they could not sell some of these cars in sales have gone down during the scandal. they lost revenue and lost profit. many are losing money. they were threatening lawsuits, a few of them filed some lawsuits without waiting for a deal to be settled. this $1.2 billion will be spread out about average of $2 million per dealer. on the size of

the dealer in so forth. the big thing they are giving is they are worrying the prices the cars, they will give them more product to sell. the promises is here is some money to make you happy and you will be able to sell more cars because we are dropping the price and we will have a bunch of new vehicles. this is how they hope to have him hold for the next five years. david: volkswagen had promised them there are going to invest more models and get more people to buy volkswagen. what is the reaction from dealers, is this what they wanted going in? david: the dealers think that every dealer is going to be happy with this. they is a good chance that are right. the dealers want to see the exact terms on how much money they are going to get because said it is has not $1.2 billion but we believe that is number. we -- they want to see how much

individually they would get. this is an important victory. and for management to go after the mass market and go up .gainst toyota volkswagen had been talking about raising prices and trying to go back to their roots of the 2000 before that of being a premium price carmaker. not quite bmw but more expensive than to rihanna a. when you charge a higher prices the dollars do not -- dealers do not do great volume. they -- this is a big concession that the company will try to spreadsheetme market. we may see some dealers, there are some who are still unhappy. i think volkswagen has gotten a lot of it behind them in terms of the big cost so if they can get a dealer to sign off on this and they still have to find a fix for the diesel engines that

are out there. if they can kneels down -- now there's down there pretty much done. that is a mystery wrapped up in a month. you.e: thank david wells in detroit. seeing ae commodities big rise so far this year up 34.2%. this is bloomberg.

in the last two days -- -- claiming that some of their devices were at risk of hacking.

thing to do is refusing and saying that it reinforces the security of its devices and reinforcing its commitment to safety. st. jude medical trading down. for options inside. >> good to speak with you. happy friday. you know the market might not happy because we are down stanley fischer said the september rate hike might be on the table. we saw the markets pop. what is your take on this? is sometimes get exaggerated moves and that is what the action today. we had been trading between 12

and 14 for many weeks and now we are at the highest level in a couple of months. it is important to remember that we are below to mid point of most of the action prettier. you get these pops and it gets worse back down. it will be important to see how things react in the next coming sessions. >> gold and silver are falling today at least on the flat line. we did see them pop earlier on the day losing steam like equities. having withg to be them especially with the fed potentially having this rate hike in september of 42% according to fed funds futures now. that was 15% a couple days ago so that possibility has increased. if you look at december it is above 60%. that is more than likely happening by the end of the year so we will have to wait and see. we have been down this road before. this is a second chance and silver and a second chance in these metals but silver has more

upside potential. you saw a big break out in july. during 2016 and now it has pulled back lenny on that 17 level. >> all the glitter is not gold, that is what they say. >> looking at this slv i am looking at the call for january. it is two dollars and the money, more than that. the options trading about $300. it is rather inexpensive option but it has a high delta. if silver gets back to that $20 level this option will gain about 60%. it is a risk reward play linning on the level that was a breakout before. now that we have seen the come back and silver this is a good second chance.

so much on playing silver in the options market. back to you. bonnie: knock-down 6% at the time of the hold. st.ave a new statement from jude medical saying the company is examining the allegations made by muddy waters capital on our airwaves yesterday. regarding the safety and security of pacemakers and different lenders and why we would have preferred the opportunity to review a detailed account of the information based on available information we conclude the report is false and misleading. david: this has been supported through our regulatory commissions. more to come next. ♪

bonnie: you're watching bloomberg markets. matt: imf miller.

-- i am matt miller. --rlet: the device making maker responding to allegations that some of the different glitters and pacemakers and other devices are vulnerable to hacking. saint jude said it has concluded misleading,lse and that is a direct quote and reinforces the security of devices and commitment to safety , all this in an e-mailed statement. and some details about how st. jude's says it is not possible the battery can be depleted in a if the foot range. in response to specific allegation. in to what listen they told us yesterday when he announced his short sale. >> number one it should stop selling these devices until it has a way to -- until it has developed a new secure medication protocol. in the interim and i am speaking

not from a medical perspective, patients, users should speak from their doctors but from a security perspective st. jude's should disable the rf capabilities of the implanted devices. matt: med tech made some very targeted accusations about certain technical aspects like this battery, and possibility of the battery being too pleated, that st. jude's is responding to. that is why the stock is been halted and i am sure there is a fight that will play out over the coming days and weeks. a halfas nine and percent lower than it was. it is down another 2.6% today and trading at the lowest level since mid-may of this year. matt: let's check in on bloomberg headlines from the first word news deck. -- desk.

was limitedrement to areas with active zynga transmission by puerto rico and two florida counties. test of nations were hiv, hepatitis, and west nile virus. u.s. health officials say they have the first case of zynga spread through sex by around with no symptoms of the disease. doctors say it is spreading to someone from with no symptoms is extremely rare. a judge in south africa has rejected a bid to appeal the sentence of her latvian oscar pistorius. prosecutors went to lengthen his six-year sentence for calling his girlfriend calling it shockingly and inappropriately lenient. the judge said there was not a reasonable prospect another court would overturn the sentence. president obama and joe biden will campaign for hillary clinton. the president hugging -- heading for philadelphia. pennsylvania and ohio are both

critical battleground states. donald trump's presidential campaign has its own app. it is engaged in engaging the supporters. global news 20 for hours day howard by more than 2600 journalists and analysts in more than 120 countries. oliver: with 30 minutes to go to the close, let's go to abigail. abigail: we had the nasdaq ,omposite index up .8 of 1% down .4 of 1%. now back up .201%. lots of and today volatility after fed chair janet yellen speech in jackson hole.

is on forthe nasdaq its first weekly loss in nine weeks. if the nasdaq climbs a bit higher above 5238, the nasdaq could possibly put in its ninth week higher and the longest winning streak since november of 2009. looks like that will be down to the wire. as for what is dragging the most we had something very interesting going on. we have a tech drag and a biotech drag. we have a difference between the nasdaq composite and the nasdaq 100. the biggest point drag on the composite index is apple. there does not appear to be a cause, it could base -- be consolidation of the market. investors grappled with whether or not the company can offset slowing iphone growth. this #and weook at see a lot of uncertainty around

that iphone and what is next. out of that june quarter we see that the stock is broken above resistance. more recently it is rounding back down. uncertainty plays on if apple can stay above that horizontal line. now back down into that region. the certainty is likely to continue. we're looking at mylan, specialty pharmaceutical company down a listen -- 11% after hillary clinton raised in uproar about the price of the fe pen. it has been a big week for the nasdaq. oliver: it has indeed. matt: what should policymakers do if a session happens before the exit?

mike mckee is standing by great now. mike: thank you. have negative interest rates in place around the world. what you're talking about is something different. it is a way to make that works it is not advance the groups that are hit. what is the difference in what you're talking about? >> i am talking about making the case for an encumbering nominal interest rates in a note -- negative direction. central banks have the capacity to move rates below zero to a greater extent than has been possible. the reason i am talking about that is central banks have no choice but to follow. what we call the natural rates of interest that are governed by forces beyond central banking and they have fallen from 4% in the 1990's to around 0% due to

some factors we may getting to in a moment. it is about moving short-term interest rates over the business cycle. right now we are in a situation where we are near zero and we have a major recession in the advance world central banks would be encumbered by being unable to move their short-term nominal interest rates dropping lower as has been the case. >> how do you do it? >> i will try to boil this down. central banks -- create reserves , excess reserves that it is not need. bank cannot get rid of those reserves because they are forced hold them in aggregate by the central bank. to loans to each other. .hey drive it down banks will not land below the floor because they can hold those reserves at whatever the interest on reserves is. but given all these extra

reserves the been pumped out there the bank still wants to get rid of them like a hot potato. chargeshe central bank interest on reserves rather than pay the center bank to hold reserves the bank will try to lend them to each other again driving the interbank rate data from zero down to the negative interest on the four. the central bank can make nominal interest rates as for below zero as it wants. it would advantage yanks who would be reluctant to pass these negative rates on to their relied -- and to their investors. the reason that banks have not been passing this negative rate to retail depositors is no one is sure how long they will last or how deep they will be. the banks are eating the cost and their profits take a hit.

over time if the central bank was completely unencumbered and moving its interbank rate negative and could do so persistently and significantly, there's every reason to think that the banks because of competition among themselves to keep retail depositors to minimize their cost and satisfy investors they would do it as they usually do. they would push deposit rates down in keeping with monetary policy. fix a few push deposit rates down financial depression also contributes to the slowing of demand in the economy. if you can negative interest rates imposed on customers then why don't they just hold cash estate of putting it in the bank? >> undercurrent arrangements the central banks have promised to make cash available at par with deposits. cash pay zero interest in the bank is trying to force depositors to pay interest.

we still run this arrangement where you can get cash it will and depositors who ran to cash. we know from the current experience with slightly negative nominal rates that there are frictions in getting cash. there has not been a run on cash it. if the central bank were inclined to push the policy , there would be a run undercurrent inventions. -- and exchange rate change? a downturnre is central banks may want to do rates- push short-term below nominal term rates. if you look back at the everyions in the u.s., on case the short rate was push 2.5 percentage points below and a

few occasions pushed 3%. we would like the fed to push rates down to maybe minus one or minus two. and keep it there. it will be hard to do that if you are guaranteeing currency for deposits. my idea is simply float the deposit price so there would be an increased demand for currency. deposit price rise. >> a fascinating idea. one that is sure to be discussed in the corridors in jackson hole. paperre he will make the available online. back to you. thank you. bonnie: the company giving a

response to allegations from muddy waters and med tech that some of its devices are vulnerable to hacking. the statement here. we have examined the allegations on august we five regarding the safety and security of our peacemakers and different relators. we conclude that the report is false and misleading. our top priority is to assure physicians and caregivers that our [indiscernible] i secured. we stamp and the security and safety of our devices. again share still halted from trading but as you noted, big declines of the past five days. with yesterday we spoke the med tech executive and she it explained why her company went directly to carson block

and not to saint jude. >> i recognize that a lot of the time standard operating procedures are to approach the manufacturer. what we have seen unfortunately is history of sweeping these issues and the carpet. -- under the carpet. matoliver: next more from jacksn hole and the fed president james bullard. the problem with productivity and a lot more. this is bloomberg. ♪

matt: on a day like today with janet yellen saying there could be a rate hike. earlier today kathleen hays and mike mccain challenged jim bullard on the federal reserve data model particularly the effort to generate inflation. ourit is time to rethink realization plans and the way we are presenting our normalization plans, if you look at that. club which has all those going up at any moment, 200 basis points, that is probably not the right characterization of what is going to happen over the forecast horizon. that is what we came up with the idea about let's not pretend we have a lot of certainty about where the long run outcome is. let's make policy for we are today which is a low productivity growth environment and a very low real rate of return on government paper and

those are the parameters that we are working with and make the right policy for that and keep an eye out to see of those things which in the future. >> a money manager said what is going to happen in the next recession? the fed cuts by for a 500 basis points. with a rate already so low and you're not in favor of raising it until you see a shift what is going to happen in the recession again if the fed seems to be at an impasse, almost a dead end? guest: i am not one that talks about let's raise interest rates so we can lower than later. that is not the good way to go. if you look at this paper, he horribly quite a bit of ammunition out there. some of it would be lower rates, some of it would be quantitative easing. some of it would be forward guidance. if we deploy the things we have played last time we can probably

get through a recession. even do well. goal to put a floor under recession? you have done qe and forward guidance and we do not have any measurable inflation. guest: inflation is low but it is not that low. maybe half a percentage point or less below our target. that -- he is at nine -- it is pretty low. unemployment has come down and we are basically right on target. a little oh. we think it will come up. we're doing pretty well. close --not generating growth. >> monetary policy does not drive growth.

you can have a temporary effect that that wears off and the medium term and longer rent is driven by productivity trends in population trends and labor force trance. want's things need, if you that to be better and i do want it to be better but you cannot do that through monetary policy. monetary policy is about cyclical movement. oliver: that was jim bullard president of st. louis federal reserve. matt: the shares have recovered all of their loss from earlier this morning. i have a three-day chart here on my terminal so you can see there was not a lot of action on monday a slight drop there. yesterday this huge drop down revealed hislock's short interest in the company and then you can see the second of then when the ceo medical company explained what

they had found as far as phone abilities in st. jude medical equipment. you can see there was a drop this morning, not a lot of action until the halt or now that saint jude has come out and claims, the shares have recovered. >> the first thing you have to do with the shortselling report is figure out how valid the claims are. carson block has a pretty good reputation. one of the analysts, josh thatngs released a note said depreciation as a result of muddy waters' claims was that severeying action was probably not going to happen and saint jude is very direct. matt: you have to worry about if you are long st. jude's you have to worry about severe action and you have to worry about abbott labs trying to get out of the they have offered 25 billion for

the company. >> anytime there is a big report from anyone who is well-known other people look into this not -- stock and it gets a snowball rolling. scarlet: we look at the chart you cannot miss. -- winning the retail race and it might surprise you. ♪

scarlet: this is bloomberg markets. time for our chart chat my we look at graphs that illustrate trends in the market and i want to start with retail. tough times for frick and mortar retail except for this month when it is time to go back to school shopping. and went to staples just before and i need toed go buy shoes and clothes next week and apparently i am not alone because the survey shows

only -- almost 90% of supplies are purchased in stores. there is the 10% that is not done in stores. i need to check how tall my kids are or how big their feet of ground. you have to size up. did some shopping it was the last minute and you can get those deals online. you dig in the bottom of the barrel. i do not think you can do that online. scarlet: people are away a lot and it may be easier to go to the store. matt: as a single guy i do not encounter that. one thing i do encounter is a

flattening yield curve. theelt now if you look at five 30's, when you can look at a different number of spreads, i have the spread between the five year in the 30 year treasuries. we got flatter in flatter today. even though there really was not a lot of action. initially you did was an understatement as far as reaction in the markets to janet speech. we did come down to the march 2015 lows as far as flattening on the yield curve. not quite to the 2014 those which had the lowest we have seen since 2007 and the red areas are the recession shaded, this chart goes back to 2000. the yield curve continues to flatten. nowhere near inversion yet. i should move my line down. i will move it down to the zero. that is where you would see an inverted yield curve. we had one going in to the first recession and -- of the decade

and we had gone -- one going just before the housing crisis. oliver: i am talking about the death of the safety trade. the top panel is looking at utility stocks that are weakening quite a bit. doing very that are well beating the s&p 500. and then you are looking at where those safety plays are coming together. the red line shows that you are -- outstanding shares are dropping and the white bar shows your best people are taking money out of this funds. a mixed trade with the nasdaq higher. this is bloomberg. ♪

scarlet: we are moments away from the closing bell.

u.s. stocks closing lower this afternoon. the s&p 500 and the dow declining for a second straight week. for a chair janet yellen says the case to raise interest rate is getting stronger. we break down the market reaction to her comment today. matt: and a like report from jackson hole with peter henry. oliver: and china's mysterious tourism numbers. how the changes are impacting the global economy, especially europe. >> we begin with our market minutes after more than a most size of theut the next rate move. janet yellen spoke today and u.s. stocks closed mixed. lowerp endemol closing for the second straight day. health care was